Blair and I turned in a manuscript that was much, much longer than the publisher expected. Bob Miller, our editor, was very kind about it, and we didn’t have to cut too much out of the final text. Here is one of the “codas” that we had to drop.

Ka-ching! The Grateful Dead’s Modern Merch

Peter McQuaid was hired to be Director of Merchandising (and eventually CEO) just as the Dead’s popularity was peaking in the late 1980s.

Peter McQuaid: I think it was 1988 that the Grateful Dead parted with Winterland [Productions], which had been their merchandising licensee for a long time, and went with a company back East called Brockum. That deal didn’t end up being as successful as the band wanted it to be, primarily because they didn’t relate to one another. They started this process of trying to figure out what they wanted to do, which coincided with the band having become so big [post-“Touch of Grey’]. They felt, “We have to control this.” One of the things they wanted to do was re-examine Grateful Dead Records and Grateful Dead Merchandising to see if they should be reined in — not so much to turn them into big businesses, but to put away the issues that had to do with third parties that were involved with this stuff.

They interviewed a bunch of people, and I got the job [to help bring the merchandising operation in-house]. It was like a two-month process with five or six interviews. The final interview I had was with Garcia and Billy, and that was strange dynamic. Billy was like a cut-to-the-chase kind of guy: “Okay, what’s the first thing you’d do if you get this job?” I think he wanted to hear, “I’m going to fire a bunch of these people because they’re not doing anything.” I said, “I really don’t know. I have no idea.” And he stopped and said, “That’s a pretty good answer.” I said, “I’d go up there and figure it out.” Garcia was like, “Well, man, we don’t really need to do anything up there, except that we’d like to be able to control the thing and make sure that what’s happening is cool.”

But there was nothing about “We want to bring in X amount from merchandising.” At the time, they were bringing in fifty or sixty million bucks a year just in tour revenue. I was very fortunate: I came along when they needed to make a change, to maintain some respectability and to avoid being embarrassed or displeased with what was going on with our name. It was a very unusual situation for someone who was business-minded like me to come into. I didn’t feel any pressure from them at all to make a lot of money.

I was hired as the Director of Merchandising, which made me the co-head of Grateful Dead Merchandising along with Kidd [Candelario]. Kidd and Patty Harris had put together this effort to revive Grateful Dead Records and reissue the albums from the United Artists era, and interface with Brockum. Kidd was primarily a roadie, of course, and he was a good guy to have out there to interface with the scene in the parking lot, which he did.

[GDM] was not profitable; the overhead was pretty darn high. There were all these people working there and no steady engine to drive the business. It was there to sell stuff that Brockum had made, or before that, Winterland. Due to the nature of the deals with those companies, the profit margins were not as good as the should have been. It was viewed as an extension of the Grateful Dead spirit, but it just wasn’t efficient — not for lack of trying, but because the underlying deals having to do with record distribution and merchandising couldn’t be competitive with “real” businesses.

It hit me that it was really important for the fans to feel like they were dealing with the Grateful Dead, and not Winterland or Brockum, and that they wanted to support this and that’s where they would go to buy their stuff. We started doing the Grateful Dead Almanac [a beautifully designed newsletter for Dead products that started in 1993 with Gary Lambert as editor]. We did it in desktop [publishing], which was still kind of new at that time, and we were able to send it out to the mailing list three or four times a year. It devoted space to news about the band, and maybe a report on the Rex Foundation, and a comic strip by Tim Truman, and it integrated some of the stuff that was around when St. Dilbert was in the mailings [in the original “Dead Heads” newsletter from the early ’70s].

The Almanac was a big hit out of the gate. The fact that we could do it so quickly and it looked so good and could be competitive with a real professional thing — but was our own — really made a difference to the Deadheads; they appreciated it. In those days, before online commerce, people would order from 1-800-CAL-DEAD; after we mailed the first Almanac it got so busy that AT&T called me to say, “We’re sorry, but there must be something wrong with the activity we’re seeing on your lines. You’re getting twelve thousand, five hundred orders a day.” It was really cool.

When I got there, they had put out One from the Vault and Two from the Vault [archival releases from multitrack tapes, spearheaded by Dan Healy]. They sold about a hundred and fifty thousand copies of each of those; it was pretty impressive. But in the first week I was there I was informed, not by the band, but others: “That’s it. There’s going to be no more music coming out of the vault. That stuff isn’t release-quality; we can’t sell that stuff. Dan Healy found the two shows that were worth doing.”

Around that time, though, there were a couple of campaigns around Dick Latvala to start putting out what became Dick’s Picks. Kidd and Dick were tight, and David Gans and Gary Lambert were also getting in Phil’s ear about putting out some of the vault music. Dick and Kidd would talk about it with the band, and then they were coming to me and saying, “You’re the new guy. You’re supposed to be running this thing, so we’ve got to put out this music.” I said, “It’s my understanding that we’re not going to do that.”

Right around this time, though, I became aware of all the bootleg CDs that were starting to show up, especially from Italy. So Kidd or Dick brought in this huge box of probably twenty or thirty multi-disc bootleg sets that had come from Italy. I took them all to a band meeting and I put them on the table; the [band] guys were picking them up and tossing them back and kind of grumbling. I explained that they were CDs from their concerts. I said, “It’s my job to let you know what’s going on with your stuff. This is getting big, and one good way to deal with it is to do something better to compete.” Within about twenty minutes, they said, “Okay, do it.” Dick was in the meeting — I think it was the only board meeting he ever came to — and he was so giddy he jumped up and ran out of the room. “My prayers have been answered!” He was the happiest man in the universe. [Laughs] And that was the start of Dick’s Picks.

I think Dick’s Picks 1 sold about ninety thousand copies and Dick’s Picks 2 around seventy-five thousand, all through mail order. They were big successes, and then, over time, we’d give Arista [which got a small cut for each set sold in exchange for permission to release non-Arista product by mail order], say, Dick’s Picks 1 through 6, and 7 through 12, and they’d put them in the stores for a limited time only and they were big sellers. Aside from In the Dark, Arista made more money from Dick’s Picks than anything else connected to the Dead. And they didn’t have to do any work or put up any money.